Inventory Management

 Is a discipline primarily about specifying the shape and placement of stocked goods.

 It is required at different locations within a facility or within many locations of a supply

network to proceed the regular and planned course of production and stock of
materials.

 The scope of Inventory Management concerns the balance replenishment, lead time,
carrying cost of inventory, asset management, inventory forecasting, valuation, visibility,
future inventory price, forecasting, physical inventory, available physical stock, quality
management, replenishment, defective goods and demand forecasting. Balancing these
competing requirements leads to optimal inventory levels.

 A collection of tools, techniques and strategies for storing, tracking and delivery and
ordering inventory of stocks.

TECHNIQUES

1. Economic Order Quantity

 The lowest amount of inventory you must order to meet the peak of
customer demand without going out of stock and without producing
obsolete inventory.

2. Minimum Order Quantity

 The lowest set amount of stock that a supplier is willing to sell.

3. ABC Analysis
 A method of sorting your inventory into 3 categories according to how well
the sell and how much they cost to hold.

4. Just In Time Inventory

 Simple making what is needed, when it is needed, in the amount needed.
5. Minimize Costs
 Such as rent

6. Safety Stock Inventory

>small surplus amount of inventory you keep on hand to guard against
variability in market demand and lead time.

7. FIFO & LIFO

8. Reorder point formula

>tells you approximately when you should order more stocks-that is when
you reached the lowest amount of inventory you can sustain before you need
more.

Reorder Point = Average Daily Unit Sales X Average Lead Time in delivery X Safety stock

9. Batch Tracking
 Lot tracking
 A process for efficiently tracing goods along the distribution chain using
batch numbers

10. Consignment Inventory

 A business agreement where the consignee agrees to give their goods to
consignee without the paying for the goods up

11. Lean Manufacturing System

 A system for maximizing product value for the customer while minimizing
waste without sacrificing the productivity.

MUDA – creates waste

MURA – creates inconsistent and inefficient work flows
MURI – all task or loads that put too much stress on employee or machines.

12. Six Sigma

 Process that seeks to reduce product defects
 Goal is to produce nearly perfect products for customers

 DMAIC – improve and correct processes

> Define, Measure, Analyze, Improve, Control

 DMADV
 Define, Measure, Analyze, Design, Verify

13. Demand Forecasting

 Process of predicting what your customers will buy, how much the will buy
and when they will buy

INVENTORY CONTROL
 Coordination and supervision of supplies, storage, distribution and
recording of materials to maintain quantities, adequate for current needs
without excessive oversupply or loss.

5’S
1. Seiri = Sort
2. Seiton = Set in Ordrer
3. Sesio = Shine
4. Seiketsu = Standardize
5. Shiketon = Sustain